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Will the dollar dominate the forex scene again for another week this week? Here are the catalysts you should watch out for:

Powell’s speech (Oct. 3, 8:00 pm GMT)

In one of his last statements Fed Chairman Powell signaled that the Fed is done with forward guidance.

Powell will only be speaking at a festival in D.C., but that doesn’t mean traders will pay less attention to him this time around.

Look out for clues on the Fed’s plan to be less “accommodative” in its policies, as well as any clues on how the central bank will proceed with its processes without forward guidance.

NFP week shenanigans

What’s a start of a new month without NFP-related volatility? The ADP report on Wednesday will kick off the speculations and, word around the hood is that the release could print more additional jobs created (187K vs. 163K previous) for the month of September.

The Challenger job cuts and weekly jobless claims are next on Thursday during the U.S. session, though the ISM manufacturing and non-manufacturing numbers could also hint at the strength of the job market last month.

And then there’s the much-awaited NFP report. Analysts expect to see a net of 185K jobs created in September, which is a tad weaker than the 201K net addition seen in August.

However, the unemployment rate is expected to dip from 3.9% to 3.8% while average earnings is also expected to calm down from 0.4% to 0.3%.

So, it looks like market players are expecting mixed deets from the report. Will these lead to a bit of profit-taking from last week’s gains? Or will traders look at the upside surprises and continue to push the scrilla higher across the board?

Last Week’s Price Review

The Greenback is currently THE top-performing currency of the week (as of 5:00 pm GMT), so the Greenback’s two-week losing streak will likely end soon.

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

The Greenback had a wobbly start, but caught a bid during Monday’s U.S. session. There were no apparent catalysts, but market analysts were pointing to preemptive positioning ahead of the Fed’s expected rate hike.

The Greenback’s rally would run out of steam come Tuesday, though, and most USD pairs eventually began trading somewhat sideways as market players hunkered down for the FOMC statement.

And when the Fed finally announced a rate hike, the Greenback’s initial reaction was to slump across the board, likely because of profit-taking since a rate hike was widely expected.

However, the Greenback quickly bounced back and there was even follow-through buying.

And market analysts were quick to latch on to the Fed’s decision to drop the word “accommodative” from the Fed’s characterization of its monetary policy, which is a hawkish move since that implies that the Fed is switching to a more restraining role (for a growing economy that may overheat). Fed Chair Powell tried to downplay the change in language, though.

Interestingly enough, the Fed’s decision to drop the “accommodative” characterization of its monetary policy is actually widely expected since the minutes of the August FOMC meeting already spilled the beans (emphasis mine):

“Many participants noted that it would likely be appropriate in the not-too-distant future to revise the Committee’s characterization of the stance of monetary policy in its postmeeting statement. They agreed that the statement’s language that ‘the stance of monetary policy remains accommodative’ would, at some point fairly soon, no longer be appropriate.”

Anyhow, the Greenback’s rise would accelerate on Thursday, likely because of safe-haven demand (at the euro’s expense) since the Greenback clearly caught a bid when word got around that Italy’s budget meeting will be delayed.

The Greenback then steadily marched higher and didn’t stop until after Italy’s government announced a 2019 budget deficit of 2.4% of GDP.

After that, the Greenback had a more mixed performance but was mostly range-bound on Friday. The Greenback did get slapped broadly lower near the end, though, probably because of profit-taking, or a delayed reaction to the weaker-than-expected reading for the core PCE price index (0.0% vs. 0.1% expected, 0.2% previous).